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Bellevue abandons affordable housing in shiny Spring District

For all of us stuck in traffic purgatory, the expansion of light rail can’t come fast enough. The current system carries a small but growing number of passengers, but hope springs for a real shift when the system reaches more destinations. (The East Link line running across Lake Washington would add 10 stations and 14 miles to Sound Transit’s light rail system.)

The train is an alternative to the car/freeway, but also a means to something else: a more compact city, a grand scheme that began with growth management and now, perhaps, lies within reach. The more we choke on our own exhaust, the more attractive this alternative becomes.

How this pattern of development grows and evolves is not a trivial matter, not just to be discussed at conferences with planners in cotton pants and bike shorts.

Reader, you have skin in this game. Even if you never ride light rail, you should be rooting for its success — if for no other reason than to get potential future riders out of their cars, off the road and out of your way.

How to maximize ridership? One of the most important tools is to build housing and offices at new stations. There is a name for this — Transit Oriented Development or TOD. Sounds fancy, but it’s really just putting density around stations.

And yet, it's an idea that makes planners practically pee in their lycra. It adds riders to light rail and creates density all at the same time. The promised land of regional planning.

How is it going? It’s either moving forward or a burgeoning disaster. Take your pick.

Perhaps the best example of TOD in the Puget Sound area is a project just coming out of the ground. In Bellevue's Spring District, master developer Wright Runstad & Company is turning a distribution and warehouse district (the kind of place where a marauding forklift might go unnoticed for hours) into a people place — “a vibrant, transit oriented, mixed-use urban neighborhood.”

The future Spring District. Image: NBBJ

When it’s all built, the 16 city blocks will boast 5.3 million square feet of office, residential, hotel and retail space for tenants like restaurants and "diverse local shops". Office space will total approximately 3.7 million square feet — equal to two and one half Columbia Centers — and there will be about 1,200 new apartments or condos. Its location is ideal — plopped between downtown Bellevue and Microsoft Land. Initial occupancy is slated for 2015.

Whether the Spring District will have the same charm of Portland's Pearl District, where new construction is tucked in amongst existing and funky old buildings, remains to be seen. Still, it's a rare opportunity to imagine a new neighborhood from the ground up. Its successes and failures will be of its own making.

If ever there was a chance to display the promise of new, denser development along a rail line, this would be it.

In 2009, the city of Bellevue created new zoning rules that would fundamentally change the Bel-Red neighborhood, increasing density and adding the opportunity for residential and an entirely new scale of commercial buildings. In essence, Bellevue created a new urban center, one that will be the site of new growth and which will be served by the new East Link light rail line.

The planned Bel-Red corridor turned urban mecca: Bellevue itself is on the left; Bel-Red on the right. Image: City of Bellevue

Those new rules also included special allowances for something they termed a Catalyst Project, which would act as a huge anchor tenant for the neighborhood. So far, Wright Runstadt's Spring District is the only project that meets the terms necessary to be considered a Catalyst Project — terms which include less stringent affordable housing rules and that seem to have been designed specifically for that project.

Ric Ilgenfritz, head of the Department of Planning, Environment and Project Development for Sound Transit, points out that his agency has bent over backwards to make the district a success by agreeing to build a second light rail station near the district.

Greg Johnson is President of Wright Runstad & Company. Thoughtful, earnest and seemingly low key, he is clearly excited about the venture, one he says is “on par with the largest TOD projects in the country.”

This is big time development. Billions in private capital patiently waiting maybe 15 years for the full payout. Private money betting big that they can create a new center that will compete with downtown Bellevue and other choices. Real Estate Development in capital letters.

So, how does this project measure up in terms of achieving the region’s goals — our goals?

On the surface, it’s outstanding. With 1,200 housing units and gobs of office space, the district is set to capture a significant chunk of the future of those markets while supporting regional development through light rail (though surprisingly, with roughly the same parking ratio as car-centric Bellevue Square).

Daily life in the future Spring District? Image: NBBJ

John Marasco, Chief Development Officer at Security Properties and developer of the first residential units says. “It’s great to be part of such an exciting new neighborhood … think Ballard in Bellevue and you get the picture. … It’s going to surprise a lot of people.”

Maybe not.

If the District is built out and populated by Eastside yuppies, and if the approved 10,000 parking spaces are populated by Teslas and BMW M5’s, will that be surprising?

From the standpoint of private capital, it would certainly be a success, but in the Northwest's bourgeoning conversation about fairness in economic growth, there is a danger that the Spring District will be seen as a huge missed opportunity.

In a 2013 report, the Puget Sound Regional Council predicted a “demand” for 35,000 affordable housing units around light rail stations. It would like to see an additional 18,000 units for somewhat higher incomes in the same locations. The council sees sufficient affordable housing stock as a cornerstone of public planning for light rail and urban growth.

The city of Bellevue says that it wants to be “a city that meets the housing needs of all citizens.”

Yet Art Sullivan, Program Manager of ARCH, a non-profit designed to direct money and policy toward affordable housing on the Eastside, points out that there is no requirement for affordable housing in the Spring District.

No requirements, but incentives. In exchange for allowing developers in the Bel-Red neighborhood to construct larger and taller buildings, the city requires that the developer create either some rental units affordable to people at 80 percent of median income, or some condos affordable to people at 100 percent of median income. A third choice is to pay into a fund where “someone” could build affordable housing “in other places.” The current Bel-Red zoning code requires a fee of $18 per SF when seeking to add additional residential area, but Catalyst Projects pay a reduced fee of “not less than $3.75 per SF”.

For Wright Runstad and Security Properties, the developer of the Spring District's first 320 units, the choice was easy: There will be no affordable units in the first buildings, according to Wright Runstad. Nor are there plans to build any affordable units in the Spring District's remaining housing units. Instead, they will pay a fee, though not a big one.

(Strangely, Carol Hamlin, a senior planner in the City of Bellevue's Development Services Department, says they have not received any funds thus far from Wright Runstadt and have not made any calculations regarding housing fees they might recieve in the future.)

When asked how this fits with public desire to meet demand for housing at a range of income levels, Johnson notes that others can take the money that they will pay and build nearby, within walking distance. But won’t land values rise with the train, as they have elsewhere in Seattle, making future affordable housing development pricey, and thus requiring more public dollars? That is possible, he agreed.

Actually, it has already happened. Imagine Housing, an Eastside non-profit affordable housing developer, expressed interest in purchasing a parcel near the Spring District, but was outbid.

Still, Johnson says there is one way Wright Runstad would consider adding affordable housing to their plans — if Bellevue creates a new incentive called the Multifamily Property Tax Exemption Program. That program would exempt developers from property taxes on their improvements for 8-12 years in exchange for affordable housing units (at levels and terms so far undetermined).

“We would do the financial calculations,” Johnson said, and if it worked out “it would definitely influence us” to build affordable housing on-site. Johnson claims it works in Seattle, though some Seattle city councilmembers have questioned the program's value.

The fact is that the city, in pursuing its version of smart growth, failed to play the affordable housing card. Despite the policies of regional planners to harness growth for all, Bellevue traded away its density for benefits which appear to have little affordable housing impact.

The Spring District's lack of affordable housing is notable because of its size and notoriety, but it's not alone. According to a report by the Puget Sound Regional Council, the only affordable housing that has so far been built along the light rail line has been government-subsidized.

Earlier this month however an anomaly emerged: A Chinese investor called Supernova Aeronautic Technology announced that it would be building 50 affordable housing units as part of the expansion of an existing office building across from the Spring District.